Leno Company sells goods to the Fallon Company for $10,000.It offers credit terms of 5/10,n/30.If Fallon Company pays the invoice within the discount period,Leno Company will record a debit to Cash in the amount of:

Question

Quizplus · Accepted Answer

The credit terms of 5/10, n/30 mean that the Fallon Company can deduct a 5% discount if they pay within 10 days. 
Therefore, the amount that Fallon Company needs to pay if they take the discount is: 
$10,000 x (1-0.05) = $9,500. 
Leno Company will record a debit to Cash in the amount of $9,500 if Fallon Company pays within the discount period.

Leno Company Sells Goods to the Fallon Company for $10,000